Source: The News Tribune (Tacoma, Wash.)
Last month, the Pierce County Council tapped the county sewer fund to help finance construction of an elite golf course on county-owned land in University Place.
At the same time, the council increased sewer rates by as much as 3.7 percent next year to maintain wastewater treatment facilities.
So why do county officials say there's no need to worry?
The answer is complicated but important to anyone watching the $20 million project, especially the 184,400 sewer customers. Most of them live in University Place, Lakewood, Milton and Dupont, as well as the unincorporated communities of Parkland, Spanaway, Midland, South Hill and Frederickson.
For now, they are not on the hook for the golf course. Although one worst-case scenario spells out how that might happen, county officials insist that a sewer rate increase to fund County Executive John Ladenburg's proposed golf course is about as likely as the moon crashing into the earth.
They also say there's no connection between the project and next year's increase in sewer rates.
"There's no money in the sewer rates to fund the golf course," said Tony Tipton, project manager for the county. "It's set up as a loan. It's fully intended to be paid back by future borrowing."
Councilman Dick Muri (R-Steilacoom), one of two council members in April who voted against publicly financing the project, agreed with that assessment.
"There is no co-mingling of funds," he said.
In the early 1990s, Pierce County used its Sewer Utility Fund to spend an estimated $ 40 million to buy Chambers Creek Properties. The expenditure had no effect on sewer rates. The golf course is one of numerous projects the county intends to use to reclaim the former gravel mine with a spectacular Puget Sound view.
The council set up a schedule of quarterly public briefings to monitor the golf course project's financial evolution. While no date or time has been set, the next briefing is expected in February.
As it stands, here's how the county's plan would work.
Last month, the council adopted a 2005 budget that includes $ 6.3 million for the golf course project. Of that, $ 2.1 million would go toward design, and roughly $ 4.2 million would go toward the start of construction.
The county is borrowing the $ 2.1 million in design money from the Sewer Utility Fund. The county plans to borrow the $ 4.2 million in construction money from a bank.
In both cases, the county plans to pay back what it borrows. The county will use the short-term financing it secures from a bank to pay back the money from the Sewer Utility Fund, said Brian Ziegler, director of the county's public works and utilities.
"The sewer utility will be made whole by the end of '05," he said.
Once the county knows the final costs of building the golf course it plans to replace the short-term financing with permanent financing through bonds.
The county hopes to begin construction on the golf course next fall and open it for play in May 2007. The county plans to use revenue generated by the golf course to pay off the long-term debt it incurs when it sells the bonds.
Although it does not have the force of law, a resolution passed by the council in April declares its intention to protect the general taxpayer: "The Council believes that Pierce County's general fund should not be at risk for the debt service of financing the construction of the Golf Course because the general fund is the source of funding for more essential public services like public safety."
Still, Councilman Muri, who believes the project should be financed and built by private developers, wonders what happens if things go wrong. "If this thing does flop, who is going to make up the difference?" he said.
The course is projected to cost $ 20 million, including planned trails and open space.
Under the worst scenario, officials have said, the county would raise sewer rates as much as $ 1 a month to pay off the debt if the golf course fails.
Next year, homeowners in unincorporated Pierce County and some cities will pay a monthly sewer bill of $ 22.15 - an increase of 3.7 percent from this year. The county's residential sewer rates are the lowest of the major service providers in Western Washington. Sumner charges $ 51.21 per month. Tacoma charges $ 33.38.
Under the best scenario, the golf course pays for itself. Backers believe that will become reality.
"We're doing the best job we can to develop the property in a way that it will be financially successful to Pierce County," Tipton said. "We're working with firms that are at the top of their game."